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Present: Pereira J. and De Sampayo A.J.KISTNAPPA v. RTJTNAM.
51—D. C. Colombo, 37,084.
Instrument admitted in evidence—Cannot be called in question at a laterstage on ground that it was not duly stamped—“ Guarantee •Should it be stamped as_a promissory note ?—Stamp Ordinance.
When'an instrument is once admitted in evidence in a case* theadmission cannot be called in question in any subsequent stage ofthe same case on the ground that the instrument has not been dulystamped.
The expression “ promissory note ” is, by the Stamp Ordinance,1909, defined for the purposes of the Ordinance to include, inter alia,“ a note promising the payment of any sum of money upon anycondition or contingency which may or may not be performedor happen."
Held, per Pereira J. (Db Sampayo A.J. dissentiente), that adocument whereby A promised to pay B a certain sum of moneyat the expiration of a certain time, if within that time the makerof a certain promissory note failed to pay B the amount of thatnote, although it was in effect a guarantee, was, in terms of thedefinition above, liable to stamp duty under the Ordinance as if itwere a promissory note.
HE facts are set out as follows in the judgment of De SampayoA.J.; —
“ On November 4, 1910, the plaintiff lent to S. L. 0. Marikar andP. G-. Weerasinghe a sum of Rs. 1,000 on a promissory note payableon demand, and on the same day the defendant granted to theplaintiff the document P 1, which is in the following terms: —-
I, the undersigned, do hereby guarantee payment of a sum ofR$. 1,000 only to K. M. N. M. Kistnappa Chetty (the plaintiff) withinthree months of the date hereof, in the event of S. L. O. Marikar andP. G. Weerasinghe, or either of them, failing to pay the sum of Rs. 1,000due from them to the said K. M. N. M. Kistnappa Chetty on a pro-missory note dated the 4th day of November, 1910.
(Signed) V. Rutnam.
“ The plaintiff declared upon this document as upon a guaranteegiven by the defendant for the payment of Rs. 1,000 by the principaldebtors, S. L. O. Marikar and P. G. Weerasinghe. The defendantpractically admitted the averments in the plaint, but denied thatany cause of action had accrued to the plaintiff on the above agree-ment, and further pleaded that the plaintiff by extending the time
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of payment by the debtors had discharged the defendant from his 18*4-liability as guarantor, and that this action was not maintainable Kistnappawithout the principal debtors being first sued. At the trial certain v- Jtuinot»issues were framed on these pleadings, and when the plaintifftendered the document P 1 in evidence it was objected to as not beingstamped. The trial, however, proceeded, and the dooument havingbeen subsequently stamped as an agreement under the provisionsof section 36 of the Stamp Ordinance, No. 22 of 1909, the DistrictJudge admitted it in evidence and gave judgment for the plaintiff. ”
The defendant appealed.
A. 8t. V. Jayewardene, E. W. Jayewardene, and Chitty, fordefendant, appellant.
Bawa, K.C., and Morgan de Saram, for plaintiff, respondent.
Cur. adv. vult.
March 3, 1914. Pereira J.—
I think that the District Judge is right in holding that the docu-ment P 1 is a “ contract relating to a promissory note.” The casecited by him supports that view. But I cannot agree with him inthinking that the document is not to be treated as a promissory notefor the purposes of the Stamp Ordinance, 1909. No doubt the docu-ment is in effect a guarantee; but it is, nevertheless, what is knownas a non-mercantile promissory note in terms of the second part. of .the definition given in section 3, sub-section (21), of the Ordinanceand it is liable to stamp duty accordingly, although ij> may operateas a guarantee. The Ordinance makes a note promising paymentof a sum of money on a contingency which may or may not happena promissory note for the purposes of the Ordinance. DocumentP 1 is in plain language a promise by its maker (the defendant) topay Kistnappa Chetty Bs. 1,000 at the expiration of three months,if within that time the makers of the promissory note datedNovember 4, 1910, fail to pay Kistnappa Chetty the amount of thatnote. Divested of the contingency the document would clearly bea promissory note. It thus responds to the test laid down in volumeII., page 573, of The Laws of England as a result of the casestherein cited, namely, “ If the document would be a promissorynote in all respects save for the contingency affecting the paymentin the ordinary mercantile sense, then for stamp purposes it is apromissory note notwithstanding the contingency. ”
The main question in the case is whether it is open to the defend-ant in appeal to contend that the document' has not been dulystamped. The document has been, rightly or wrongly, admitted inevidence in the Court below, and section 37 of the Stamp Ordinanceenacts that “ when an instrument has been admitted in evidence,such admission shall not be called in question at any stage of the
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same suit or proceeding on the ground that the instrument hag notbeen duly stamped. ” This provision is Bubjeot to an exceptionyrhioh need not be mentioned here, because it has no application toa case like the present, except perhaps to the extent of showing thatthe admission of a document in evidence, as in the present case, is notto be called in question, even in the Supreme Court, on an appealfrom any order in the case. The words of the section are too clearto admit of any discussion, and I do not think that, in the circum-stances, it is open to the appellant to contend that the document inquestion has not been duly stamped. I may say that the decisionsof the Indian Courts cited by the respondent’s counsel (Loll v. JungleSingh,1 Shidapa v. Irava 8 appear to support this view.
I would dismiss the appeal with costs.
De Sampayo A.J.—
His Lordship stated the facts, and continued: —
The point of the objection, which is.repeated in appeal, is that a“ promissory note ” as defined in the Stamp Ordinance is, amongother instruments', excluded from the operation of section 36, and it isargued that the document P 1 is a promissory note within themeaning of the Stamp Ordinance. A promissory note as a mercantileinstrument must, of course, contain an absolute promise to pay, andmust not be payable out of a particular fund or upon a condition orcontingency; but for the purposes of the Btamp duty the StampOrdinance ‘defines a promissory note so as to include “ a note pro- ■mining the payment of any sum of money out of any particular fundwhich may or may not be available, or upon any condition orcontingency which may or may not be performed or happen. ” TheEnglish Stamp Act contains a similar- provision and has the sameobject in view. It is plain that, even for the purposes of the StampOrdinance, the instrument must be such as would, but for thereference to any particular fund or to a condition or contingency,constitute a promissory note under the law merchant. I cannotthink that the document P 1 is such an instrument. The expression“ guarantee payment ’’ no doubt in a sense implies a promise to pay,but “ guarantee ” is a technical term, and only implies a promisethat the guarantor will pay if the principal debtors whose debt is soguaranteed do not pay. This is exactly what the defendant did inthis case. The document can only be construed as if the defendanthad said, “ I guarantee to you the payment of Bs. 1,000 by S. L. 0.Marikar and P. G. Weerasinghe, ” in which case the idea of apromissory note would be wholly absent. For the purpose of deter-mining the nature of a document the whole of it should be read,and so reading it I think that the document P; 1 is, as it was intended *
» 3 Cal. 787.
* 18 Bom. 737.
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to be, and as the defendant himself in his answer construed it, acontract of guarantee and not a promissory note in any sense.Moreover, if S. L. O. Marikar and P. G-. Weerasinghe paid any partof the B6. 1,000, it will surely not be contended that the defendantwould sjdjl be liable under the instrument to pay more than tiebalance, and it is of the essence of a promissory note that thepromise should be to pay a definite sum and not a fluctuatingand unascertained amount. See the judgment of Lindley L.J. inMortgage Insurance Corporation v. Commissioners of Inland Revenue.1In this connection I may also refer to Dickinson v. Bower 2 cited inthe Laws of England (vol. //., p. 574), in which it has been heldthat an instrument which, though it specifies a definite 6um, show6on its face that the payment is to be by way of indemnity, andtherefore only for the amount that might at maturity turn out tobe unpaid by the principal debtor, does not fall within the definitionof promissory note in the Stamp Act. I therefore think that theplaintiff was entitled to have the document P 1 stamped underthe provisions of section 36, and that it was rightly admitted inevidence.
Even if this were otherwise, I agree that the order of the DistrictJudge admitting the document in evidence cannot be reviewed inappeal in view of the provision in section 37 (1) of the Stamp Ordi-nance, which enacts that such admission shall not be called inquestion at any stage of the same suit on the ground that theinstrument has not been duly stamped. The following sub-sectionno doubt vests a special jurisdiction in the Supreme Court in appeal,but that is for the purpose only of impounding the document witha view to a criminal prosecution, and proviso (2) proceeds expresslyto enact that except for the purposes of such prosecution nodeclaration made under this section shall affect the validity of anyorder admitting any instrument in eviaence. ” The reason for theconclusive effect of an order admitting a document is, I think, easilyunderstood. The matter of stamps concerns the revenue principally,and the parties only so far as they are affected by the laws enactedfor the protection of the revenue, and if the interests of .the revenueare conserved by any order by the Court to which a document isfirst tendered, there is no object in allowing the parties .to continuethe contentions over the matter of stamps.
I also think that this appeal should be dismissed with costs.
1 (1888) 21 Q. B. D., at pp. 366 and 367.8 (1897) 14 T. L. R. 146.
KISTNAPPA v. RUTNAM